Fausta's Blog

American and Latin American Politics, Society, and Culture

June 14, 2013 By Fausta

The Nicaragua canal: Don’t be the next Lord Crawley

Don’t be like him
For many years now we who watch Latin American news have been hearing about a Nicaraguan canal to rival the Panama canal.

Indeed, people who know Nicaraguan history have been hearing about it for centuries.

Back in 2010 the Iranians were in the picture,

Costa Rica says that last week Nicaraguan troops entered its territory along the San Juan River – the border between the two nations. Nicaragua had been conducting channel deepening work on the river when the incident occurred.

Sources in Latin America have told Haaretz that the border incident and the military pressure on Costa Rica, a country without an army, are the first step in a plan formulated by Venezuelan President Hugo Chavez and Nicaraguan President Daniel Ortega, with funding and assistance from Iran, to create a substitute for the strategically and economically important Panama Canal.

Well, Hugo died, his heir Nicolas Maduro’s still talking to the birds, the Panama Canal expansion is going on schedule, and the Iranian fervor has cooled off in the midst of its current current annual inflation rate of 105.8 percent.

Enter HK Nicaragua Canal Development Investment Co., known as HKND Group,

Nicaragua’s legislators gave their poverty-stricken country one more chance at a dream that has eluded it for nearly 200 years, granting a Hong Kong company the right to build a $40 billion interoceanic canal.

Supporters of the 50-year concession, approved Thursday, hope that it will propel Nicaragua out of its misery by boosting employment and economic growth. But there is also ample suspicion that the project will flounder, as so many others have done since the first government contract for a canal through Nicaragua was awarded in 1825.
…
The project envisions building a canal as long as 286 kilometers (178 miles), depending on which of four possible routes is used, as well as two deep-water ports, two free-trade zones, an oil pipeline, a railroad and an international airport.
…
The law granting the concession to HK Nicaragua Canal Development Investment Co., known as HKND Group, whose sole owner is Wang Jing, a 40-year-old Beijing-based entrepreneur, was introduced last week to Nicaragua’s congress, which is controlled by Mr. Ortega’s ruling Sandinista party.

Take a look at the map,

Look at the size of the existing Panama Canal, whose expansion is estimated to cost $5.25 billion dollars and take 8 years, and compare it to the projected Nicaraguan canal. Are we supposed to believe that a new canal, multiple times larger, when

work on some of the pre-feasibility studies has barely started and isn’t scheduled to be finished until next year

plus two deep-water ports, two free-trade zones, an oil pipeline, a railroad and an international airport, are supposed to cost only $40 billion?

If the Chinese government is not involved, who’s going to cough up that kind of money for that period of time?

Wang Jing’s experience appears to be only in the telecommunications industry. And he’s not even started the feasibility studies?

There’s Mr. Wang’s little deal with Daniel Ortega,

Mr. Wang registered his canal company in Hong Kong in August. A month later, on Sept. 5, he met President Ortega in Nicaragua. That day, Mr. Wang and the Nicaraguan government signed a memorandum of understanding—which wasn’t announced at the time—authorizing Mr. Wang to promote the financing and participate in the construction of a canal.

He and Mr. Ortega also discussed a telecommunications proposal, and Xinwei was awarded a $300 million telecommunications contract in Nicaragua, according to the company.

Nicaragua’s corruption frequently makes the news.

And then there’s the collapse of the Chinese stocks, which happens sporadically, since – guess what! – China doesn’t use GAAP (Generally Accepted Accounting Principles).

Bernie Madoff is probably regretting he didn’t think of this first, but Werner Herzog may be casting a lead for a movie now that Klaus Kinski is gone.

Those of us who watched Downton Abbey may recall that Robert Crawley, Earl of Grantham found that

the investment he made in the Canadian Railway has become worthless, he had lost his own and most of Cora’s money, enough to lose Downton.

Don’t be the next Lord Crawley.


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Filed Under: business, China, Daniel Ortega, Iran, Nicaragua, Panama Tagged With: Downton Abbey, HK Nicaragua Canal Development Investment Co., HKND Group, Nicaragua canal, Panama Canal, Wang Jing

Comments

  1. jlh says

    June 14, 2013 at 3:36 pm

    It all makes perfect sense. Let’s ask the Dormouse and the Mad Hatter what they think.

  2. Kermit says

    June 16, 2013 at 10:09 am

    Thanks for the insight. I was wondering about this announcement, especially with the enlargement of the Panama Canal being well underway.

    The odd part is that it includes an oil pipeline, that is, unless China (which now controls 25% of Venezuela’s crude at huge discounts) plants on shipping from Venezuela to the eastern (Caribbean) terminus and then loading supertankers at the western (Pacific) terminus for transport to China. This still must be at least a $5+ per bbl cost.

    There already is a U.S. owned Trans Panama Pipeline which was built to offload tankers coming from Alaska then load tankers headed for Gulf & East Coast crude oil terminals/refineries. It was reversed some years back to enable West Coast refineries, namely Chevron, to receive crude oil from West Africa more efficiently.

    A funny thing, these Central and South American pipelines. Significant quantities of crude oil, though small percentages, end up missing intransit without any spills occurring.

  3. Fausta says

    June 16, 2013 at 12:58 pm

    I didn’t consider the oil pipeline part, Kermit.
    Curiouser and curiouser, isn’t it?

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